MK3 9 11 2013 Primary ethical dilemma how to balance shareholder interests with the needs of society Chapter 4 The Scope of Marketing Ethics Business ethics the moral or ethical dilemmas that might arise in a business setting Marketing ethics examines those ethical problems that are specific to the domain of marketing o Must be a continuous and dynamic process Ethical Issues Associated with Marketing Decisions Since marketing is the function of business in public eye ranked poorly in ratings of most trusted professions However interacts with number of entities outside firm so it has tremendous opportunity to build public trust Creating an Ethical Climate in the Workplace The process of creating a strong ethical climate with a marketing firm or division includes having a set of values that guides decision making and behavior Everyone must have same understanding and develop explicit rules and implicit understandings that govern all of firm s transactions Many companies that produce or sell in low wage countries self police to avoid painful PR revelations American Marketing Association indicates that basic ethical values marketers should aspire to are o Honesty responsibility fairness respect openness and citizenship o Each subarea of marketing research advertising etc has own set of codes The Influence of Personal Ethics Why people act unethically o People have different understanding of ethics o Choice between what is beneficial for individual or firm in short run and society in the long run o Short term goals of each employee must be aligned with long term goals of the firm Ethics and Corporate Social Responsibility Corporate social responsibility voluntary actions taken by a company to address the ethical social and environmental impacts of its business operations and the concerns of its stakeholders AMA the impact of the company s actions and operating in a way that balances short term profit needs with society s long term needs thus ensuring the company s survival in a healthy environment Ethics versus Social Responsibility Socially Responsible Socially Irresponsible a c i h t E l Both ethically and socially responsible Ethical firm not involved with the larger community a c i h t e n U l Questionable firm practices yet donates a lot to the community Neither ethical nor socially responsible Socially responsible going above and beyond norms of corporate ethical behavior Many consumers will pay extra for responsible companies A Framework for Ethical Decision Making Step 1 Identify issues Step 2 Gather information and identify stakeholders o Normal stakeholders one off future generations and natural environment Step 3 Brainstorm alternatives Step 4 Choose a course of action o Table on page 124 Integrating Ethics Into Marketing Strategy Planning Phase Including ethical statements in firm s mission or vision statements Can guide a SWOT analysis Implementation Phase Can be tricky to be ethical make sure you target correctly Control Phase Systems to check whether each potentially ethical issue raised in planning process was successfully addressed Systems in control phase must also react to change Corporate Social Responsibility Nutrition and well being Sustainable supply chain Environmental responsibility Community Key CSR Stakeholders employees their families current customers potential cusomers Employees Customers Marketplace Society partners competitors community environment Benefits o Employees Good place to work lots of applicants better service Happy families happy employee Increases awareness of firm When competitor does CSR competitors must follow Initiating firm gets reputation for being on cutting edge Society expects companies to take on public responsibilities o Customers o Marketplace o Society Chapter 6 The Consumer Decision Process Information search The steps consumers go through before during and after making purchases 1 Need recognition 2 3 Alternative evaluation 4 Purchase 5 Post purchase Need Recognition Consumers recognize they have an unsatisfied need and would like to go from needy state to desired state Need the difference between your actual state and your desired state Wants goods or services not necessarily needed but are desired Functional needs o Pertain to the performance of a product or service Psychological needs o Pertain to the personal gratification consumers associate with a product and or service Majority of goods and services satisfy both functional and psychological needs Must determine the correct balance of functional and psychological needs that appeals to a firms target market Search for Information Internal search for information o The buyer examines his or her own memory and knowledge about the product or service gathered through past experiences External search for information o The buyer seeks information outside his or her personal knowledge base to help make the buying decisions Factors affecting consumers search processes o The perceived benefits versus the perceived costs of search o The locus of control Internal locus of control believe they have some control over the outcomes of their actions more search activities External locus of control believe that fate or other external factors control all outcomes less search activities Actual or perceived risk Performance risk perceived danger inherent in a poorly performing product or service Financial risk risk associated with a monetary outlay and includes the initial cost of the purchase as well as the costs of using the item or service Social risk fears that consumers suffer when they worry others might not regard their purchases positively Physiological risk safety risk fear of an actual harm should the product not perform properly Psychological risks those risks associated with the way people will feel if the product or service does not convey the right image o When consumers feel powerless or more vulnerable they equate larger sizes with improved status Evaluation of Alternatives Attribute sets process o Consumer s mind organizes and categorizes alternatives to aid his or her decision o Universal sets include all possible choices for a product category o Retrieval sets those brands or stores that can be readily brought forth from memory o Evoked set comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision Consumer decision rules o Evaluative criteria consist of salient or important attributes about a particular